By giving taxpayer dollars to companies like AIG, GM, Citi etc. we are just putting the federal government deeper in debt all the while this money is going to interest on loans, which are held by investors. Now do not get me wrong I do not want the investors to be wronged but we are in a very dangerous situation here. These tax dollars should be going for payroll and general expenses, such as rent, utilities, office supplies etc. to run these large corporations. They should not bee used as a siphon to the investors and bondholders on the debt that is held at this time. This is a state of emergency not a minor cash-flow problem. These companies should be put into chapter 11 reorganization to stop the outflow of cash or as they say cash-burn and give them a chance to cut expenses, sell assets and bring the firms to a greater parity with there cash flow requirements.
Also President Obama should not be deficit spending, this is not our "father's recession" and I fear it could spiral into the greatest depression this world has ever seen. Now I am not condoning what Donald Trump stated on Fox that we should not be spending and save for that strategy is what heralded the great depression forward. I will reiterate my plan which is to lower all existing interest rates to 2% and any new rates at 3.5% use the tarp to subsidies the firms for the difference between 2-3.5% and what I feel the cap should be which is 6-8%. This would be much cheaper, thrust us quicker to a more stable economy, and put us back on the path of prudent growth. Secondly, if Obama would cut taxes to all Americans, to the rich by 10% and middle class by 30%, use the existing budget, and cut the waste, we would have half the projected deficit and do far more for the recovery than what is being suggested.
As for the green jobs or new technologies he wants to start, they still can be initiated by cutting waste and projects such as the missile defense system planned for Eastern Europe. After all this system will be more divisive than helpful. The Russians have tactical nuclear weapons they will not be launching missiles but shooting them from tanks. A big waste of money and many hard feelings will come from this deployment. My interest rate plan will solve most of the real-estate problems and as for the existing government debt that should be driven down by the stability and strength of the dollar, which my plan would help hasten. Anyone with further ideas on this please comment.
Also, I am getting tired of thinking about business and want to get back to dreaming so Mr President fix this matter properly!
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Major receipt and expenditure categories for US Federal Taxes
Fiscal Year 2008 U.S. Federal ReceiptsThe U.S. Federal Government collected $2,524 billion in FY2008, while spending $2,979 billion, generating a total deficit of $455 billion, which was added to the United States public debt. Since 1970, the U.S. Federal Government has run deficits for all but four years (1998-2001)[1] contributing to a total debt of $10.6 trillion as of January 2009.[2]
Individual income taxes (45%) and Social Security/Social Insurance taxes (36%) are the primary receipt categories. Social Security, Defense, and Medicare/Medicaid spending are the main categories, at roughly 20% of total expenditures each.
And I disagree with you on deficit spending. I think deficit spending is exactly what we should doing. Granted, I wouldn't mind raising the taxes on high incomes now, instead of later as is currently planned, because that should have an insignificant effect on the economy and could be fully compensated for by using just a small portion of the proceeds for most any other purpose possible.
I also disagree on allocating more to tax cuts. I think tax cuts are some of the most ineffective forms of stimulus, more so as you target higher incomes.
And there really isn't as much waste to cut at you seem to suggest. That is unless you are taking a view that labels most government spending as waste. But for actually waste as you might find in a business audit rather than denouncing entire programs as waste, the amount is nowhere near what some people are assuming. Besides, eliminating waste is already in the plans.
Also, understand that Social Security, Medicare, and other such transfer payments should not really be considered government spending in the context of how big government is. It's not like the government is hiring people with that money. It's money that is going to people for their own personal expenses. I mean, if the government were to tax you at 200% and at the same time reimburse you for 200% of what you paid, it would essentially be no real change except for the accounting of it.
Deficit spending may work in times when the rest of the world is stable and also if the US didn't have the largest debt in history with no sign of a sustainable future business model to pay those dollars back. Not to mention that about 300 billion will be going to just service the interest on the debt, that money could be used for projects elsewhere in the economy.
Tax cuts if they are balance with regulation in the financial markets will work, they have worked in the past and will put money back into the consumers pocket providing we do not allow the credit card companies to take it out with higher rates. This is a huge balancing act but it can work.
I beg to differ with you on waste, there is a lot of and even Obama has stated such. I am not talking about programs for the needy or commitments of our forefathers. Social Security and Medicare are not directly part of the budget but they do need reform and weeding out of redundant accounting or processes.
I'm not sure how you come to your conclusions on deficit spending in a global economy, but I still disagree.
As for tax cuts, the economy lacks demand. The people who have been forced to cut back more of their demand are those who have lost their jobs, lost income, had business profits fall, or were part of the credit crunch.
The most effective stimulus to demand would be to directly create government jobs because it takes someone with little or no income (who thus is severely cutting back their spending) and gives them a source of income in return for productive work. Also effective is government contracts which have a similar effect since it causes businesses to employ more people (rather than downsizing).
Tax cuts are less effective because they go to people who already have jobs and who are much more likely to save additional income. That is more true as you deal with higher and higher incomes. It is less true as you deal with the lowest incomes or help to cover minimal expenses such as through food stamps and unemployment benefits. This is why some analyses of the effectiveness of different stimulus plans show spending items to be provide about $1.60 in stimulative effect for each dollar spent, while tax cuts in general are showing almost no multiplier effect (about 1.03 on the dollar).
And I don't think history has shown tax cuts to be effective in the past. Bush required two rounds of massive tax cuts and deficit spending to get out of a minor recession, never rescinded the tax cuts or moved towards a balanced budget, and we're back with a major recession a few year later. Anytime government have cut spending and tried to balance the budget in recessions, the results haven't been pretty. The most notable example of that is Hoover doing just that to prompt the Great Depression.
Fair enough on waste.
That is precisely what tax cuts cure, demand!
We can still have spending as I stated but as a shift in priority from golden toilets or 25 new helicopters to solar panels on all federal and state buildings and schools to start.
The people who have the jobs are the ones who create the jobs that is why they get the tax cuts people who do not work do not pay taxes so hence they do not get the tax cuts, and how can the unemployed create jobs?
We cannot use bush as any model because most of his decisions were emotional and without any theoretical economic basis.